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The Isle of Man’s connection to Greensill: providing private jet services.

An invoice dated March 1 from Greensill Capital (IOM) shows that Greensill Capital Inc was invoiced for “monthly fixed hours” – 29.2 flight hours – during March that cost £46,667 ($83,646) as well as a management fee of £1,666.67.

Another invoice dated March 11 charged Greensill Capital Inc £40,512 for “February 2021 aircraft expenses”.

The £88,845.33 claim, which is not secured, is being handled by Martyn Fiddler, the authorised representative of Greensill Capital (IOM) in the Isle of Man.

Greensill Capital Inc paid $83,646 a month for private jet

What is Greensill? Matt Levine has an excellent, as usual, explanation:

(I haven’t indented the extract below, but it is all by him, and you should subscribe to his almost-daily newsletter)

Blue vs. Green

I feel like I don’t yet entirely understand what went wrong at Greensill Capital. Greensill, the story goes, was a leader in the business of supply-chain finance, in which it would insert itself between buyers and sellers of products, paying the sellers a bit early (but at a discount) and collecting the full payment later from the buyers. This is safe, short-term financing, which Greensill would package into notes, some of which were insured by credit insurers. Then it would sell them to funds (particularly those run by Credit Suisse Group AG) that wanted slightly higher than money-market returns. Then it all went wrong in suggestive but still murky ways: The notes lost their insurance coverage, Greensill’s lending was concentrated on a few clients, there were various potential conflicts of interest, and it turned out that a lot of the lending was risky longer-term lending against “future receivables” rather than simple supply-chain finance. 

On Monday, coal company Bluestone Resources Inc. sued Greensill for lending Bluestone a bunch of money and then blowing up. Here is the complaint, which is wild, and which gives the clearest picture I’ve yet seen of how Greensill operated. 

Bluestone digs up metallurgical coal, which is used to make steel, and sells it to steel producers. There is a simple supply-chain-finance story to tell here: The steel producers pay for the coal sometime after Bluestone delivers it; Bluestone would like to be paid earlier, so it borrows the money from Greensill by selling Greensill the steel-company receivables. Bluestone gets its money faster, but at a discount, and Greensill ultimately collects the money from the steel companies when they get around to paying. Fine. In 2018, Bluestone and Greensill signed a Receivables Purchase Agreement providing for that sort of financing; by 2021 the maximum size of the facility—the most money that Greensill could advance to Bluestone at a time—was $785 million. (There was also a smaller “supply-chain financing program”; Bluestone’s total borrowing under the two programs reached $850 million.)

But the money did not all go to financing receivables. Much of it went to financing “prospective receivables” from “prospective buyers.” That is, there would be some steel company that did not buy coal from Bluestone, and Bluestone and Greensill would agree that probably it should and some day it would, and they would figure that, well, if it did buy coal from Bluestone, it would probably buy like $15 million worth, and so Greensill would lend Bluestone that $15 million. And then Greensill would eventually collect the $15 million from the steel producer, if and when it did buy coal from Bluestone. This sounds a little like I’m kidding but I’m absolutely not:

[It continues]

Michael Josem

Michael Josem is a long-term consumer advocate, most prominently as a global leader in combating fraud in the online gambling industry. He was in part the inspiration for the 20th Century Fox Movie, Runner Runner, starring Ben Affleck and Justin Timberlake.

Josem has over a decade of experience as a senior business leader working across various high-tech and online industries, and takes action to build a better community. His primary volunteer roles include service for the Commonwealth War Graves Commission, and Graih, the homelessness charity.